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17-0815 Tuesday “Daily Bugle”

17-0815 Tuesday “Daily Bugle”

Tuesday, 15 August 2017

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The Daily Bugle is a free daily newsletter from Full Circle Compliance, containing changes to export/import regulations (ATF, Customs, NISPOM, EAR, FACR/OFAC, FTR/AES, HTSUS, and ITAR), plus news and events.  Subscribe 
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  1. Commerce/BIS Amends EAR Parts 740, 772, and 774 to Implement WA 2016 Plenary Agreements 
  1. Ex/Im Items Scheduled for Publication in Future Federal Register Editions
  2. Commerce/BIS: (No new postings.)
  3. DHS/CBP Updates Entry Specialist Information
  4. State/DDTC: (No new postings.)
  5. U.S. President Continues National Emergency with Respect to Export Control Regulations
  6. EU Implements Regulation Concerning the Classification of Certain Goods in the Combined Nomenclature
  1. The Jerusalem Post: “Report: Iran and Russia Violated UN Weapons Sanctions”
  2. Reuters: “Despite Delay, U.S. Expected to Impose Steel Tariffs”
  1. J. Pin: “Encryption Control in France”
  2. M. Volkov: “Wake Up and Mind Your Culture – Practical Approaches to Managing a Company’s Culture”
  3. J.C. Poling, M.B. Fadlallah & J. Helder: ” OFAC Pushes New Limits on Jurisdiction of U.S. Sanctions by Penalizing Non-U.S. Companies for “Causing” Violations by Making U.S. Dollars Payments”
  4. Gary Stanley’s ECR Tip of the Day
  1. ECTI Presents Bringing Export Compliance into the New Century: A Roadmap for a Modern Export Compliance Program Webinar, 12 Sep  
  1. Bartlett’s Unfamiliar Quotations 
  2. Are Your Copies of Regulations Up to Date? Latest Changes: ATF (15 Jan 2016), Customs (28 Jul 2017), DOD/NISPOM (18 May 2016), EAR (15 Aug 2017), FACR/OFAC (16 Jun 2017), FTR (19 Apr 2017), HTSUS (25 Jul 2017), ITAR (11 Jan 2017) 
  3. Weekly Highlights of the Daily Bugle Top Stories 

EXIMEX/IM ITEMS FROM TODAY’S FEDERAL REGISTER

EXIM_a1
1. Commerce/BIS Amends EAR Parts 740, 772, and 774 to Implement WA 2016 Plenary Agreements 

(Source: Federal Register) [Excerpts.]
 
 
82 FR 38764-38819: Wassenaar Arrangement 2016 Plenary Agreements Implementation
 
* AGENCY: Bureau of Industry and Security, Commerce.
* ACTION: Final rule.
* SUMMARY: The Bureau of Industry and Security (BIS) maintains, as part of its Export Administration Regulations (EAR), the Commerce Control List (CCL), which identifies certain items subject to Department of Commerce jurisdiction. This final rule revises the CCL, as well as corresponding parts of the EAR, to implement changes made to the Wassenaar Arrangement List of Dual-Use Goods and Technologies (WA List) maintained and agreed to by governments participating in the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies (Wassenaar Arrangement, or WA) at the December 2016 WA Plenary meeting. The Wassenaar Arrangement advocates implementation of effective export controls on strategic items with the objective of improving regional and international security and stability. This rule harmonizes the CCL with the agreements reached at the 2016 Plenary meeting by revising Export Control Classification Numbers (ECCNs) controlled for national security reasons in each category of the CCL, as well as making other associated changes to the EAR.
* DATES: This rule is effective August 15, 2017, except that:
 
(1) The effective date for amendatory instruction 30 (ECCN 4A003 in Supplement No. 1 to part 774) is September 25, 2017; and
(2) the effective date for amendatory instruction 2 (Sec.  740.7 of the EAR) is November 24, 2017.
* SUPPLEMENTARY INFORMATION:
 
 
Background
 
 
The Wassenaar Arrangement (Wassenaar or WA) on Export Controls for Conventional Arms and Dual-Use Goods and Technologies is a group of 41 like-minded states committed to promoting responsibility and transparency in the global arms trade, and preventing destabilizing accumulations of arms. As a Participating State, the United States has committed to controlling for export all items on the WA control lists. The lists were first established in 1996 and have been revised annually thereafter. Proposals for changes to the WA control lists that achieve consensus are approved by Participating States at annual Plenary meetings. Participating States are charged with implementing the agreed list changes as soon as possible after approval. The United States’ implementation of WA list changes ensures U.S. companies have a level playing field with their competitors in other WA Participating States.
 
The changes in this rule, which reflect the changes to the WA control lists that were approved at the December 2016 WA Plenary meeting, update the corresponding items listed in the EAR, and reflect the most recent changes in technologies and conditions.
 
Revisions to the Commerce Control List Related to WA 2016 Plenary Agreements
 
 
Revises (50) ECCNs
: 1A004, 1A007, 1B001, 1C007, 1C608, 1E001, 1E002, 2A001, 2B001, 2B005, 2B991, 2D992, 2E003, 3A001, 3A002, 3A991, 3B001, 3C001, 3E001, 3E002, 3E003, 4A003, 4D001, 4D993, 5A001, 5B001, 5E001, 5A002, 5A003, 5D002, 5E002, 6A001, 6A003, 6A005, 6A008, 6D003, 6E003, 7D003, 7D004, 7E001, 7E003, 7E004, 8A002, 8C001, 9A001, 9A004, 9A515, 9B002, 9B009 and 9E003.
 
License Exception eligibility additions
: 3A001.b.12 to LVS, and 3A001.a.14 to GBS.
 
License Exception eligibility expansion
: TSR and STA for ECCNs 4D001 and 4E001.
 
Category 1 Special Materials and Related Equipment, Chemicals, “Microorganisms,” and “Toxins”  . . . .
 
 
Annex to Category 1–List of Explosives  . . . .
 
 
Category 2–Materials Processing  . . . .
 
Category 3–Electronics  . . . .
 
 
 
Category 4–Computers  . . . .
 
 
 
Category 5–Part 1–“Telecommunications”  . . . .
 
 
Category 5–Part 2–“Information Security”  . . . .
 
Category 6–Sensors and Lasers  . . . .
 
Category 7–Navigation and Avionics  
 
 
Category 8–Marine  . . . .
 
 .
Category 9–Aerospace and Propulsion  . . . 

Part 772–Definitions of Terms as Used in the Export Administration Regulations (EAR) . . . 

Supplement No. 6 to Part 774 “Sensitive List” . . . .
 
Section 740.7 “License Exception APP” . . . .
 
 
Saving Clause
 
Shipments of items removed from license exception eligibility or eligibility for export, reexport or transfer (in-country) without a license as a result of this regulatory action that were on dock for loading, on lighter, laden aboard an exporting carrier, or en route aboard a carrier to a port of export, on August 15, 2017, pursuant to actual orders for exports, reexports and transfers (in-country) to a foreign destination, may proceed to that destination under the previous license exception eligibility or without a license so long as they have been exports, reexports and transfers (in-country) before October 16, 2017. Any such items not actually exported, reexported and transferred (in-country) before midnight, on October 16, 2017, require a license in accordance with this final rule. …
 
 
Matthew S. Borman, Deputy Assistant Secretary for Export Administration.

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OGSOTHER GOVERNMENT SOURCES

OGS_a12. Ex/Im Items Scheduled for Publication in Future Federal Register Editions
(Source: Federal Register

* President: ADMINISTRATIVE ORDERS; Continuation of National Emergency (Notice of 15 Aug 2017) [Publication Date: 16 Aug 2017; the notice released by The White House is included in today’s Daily Bugle.]

* DHS/CBP: NOTICES; Automated Commercial Environments:
  – Sole CBP-Authorized Electronic Data Interchange System for Processing Duty Deferral Entry and Entry Summary Filings [Publication Date: 16 Aug 2017.]
  – Test Program Regarding Electronic Foreign Trade Zone Admission Applications and Transition of Test from Automated Commercial System to Automated Commercial Environment; Extension and Clarification [Publication Date: 16 Aug 2017.]
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OGS_a34.

DHS/CBP Updates Entry Specialist Information 

(Source: CSMS#
17-000488, 14 Aug 2017.)
 
Effective 10 July 2017, Entry personnel that perform entry functions such as collections, statement processing, broker management, etc., transitioned to the Centers of Excellence and Expertise (Centers). Organizationally, the Entry personnel fall under the chain of command of the Center Director, who is operationally responsible for performing trade processing functions and making entry summary determinations within their industry sector.
 
Entry personnel will continue to support local based processes, such as collections and broker management and the trade may contact personnel located at the port. The submission of entry documentation remains the same and the trade should continue to use existing electronic methods of submission such as the Automated Commercial Environment, or if necessary in paper at the port.
 
CBP is working on updating the Center Directory to include Supervisory Entry personnel. The Trade Process Document provides procedures and information for importers, filers and brokers to interact and submit entry documentation to the Centers. Both of these Center documents may be found on the CBP website.

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OGS_a45. State/DDTC: (No new postings.)

  

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OGS_a56. U.S.

President Continues National Emergency with Respect to Export Control Regulations

 
Notice Regarding the Continuation of the National Emergency with Respect to Export Control Regulations
 
On August 17, 2001, the President issued Executive Order 13222 pursuant to the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.).  In that order, the President declared a national emergency with respect to the unusual and extraordinary threat to the national security, foreign policy, and economy of the United States related to the expiration of the Export Administration Act of 1979, as amended (50 U.S.C. 4601 et seq.).  Because the Congress has not renewed the Export Administration Act, the national emergency declared on August 17, 2001, must continue in effect beyond August 17, 2017.  Therefore, in accordance with section 202(d) of the National Emergencies Act (50 U.S.C. 1622(d)), I am continuing for 1 year the national emergency declared in Executive Order 13222, as amended by Executive Order 13637 of March 8, 2013.
 
This notice shall be published in the Federal Register and transmitted to the Congress.
                                
DONALD J. TRUMP
 
THE WHITE HOUSE,
August 15, 2017.
 
[Editor’s Note: This notice will be published in tomorrow’s Federal Register.] 

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OGS_a067.

EU Implements Regulation Concerning the Classification of Certain Goods in the Combined Nomenclature

 
Regulations
 
* Commission Implementing Regulation (EU) 2017/1472 of 11 August 2017 concerning the classification of certain goods in the Combined Nomenclature.

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NWSNEWS

NWS_a1
8.

The Jerusalem Post: “Report: Iran and Russia Violated UN Weapons Sanctions”

(Source:
The Jerusalem Post, 15 Aug 2017.) [Excerpts.]
 
The Islamic Republic of Iran and Russia used a smuggling route to transport offensive weapons, allegedly in violation of UN Resolution 2231, German’s Welt am Sonntag newspaper reported on Sunday.
 
The broadsheet paper cited “Western intelligence services” saying Iran delivered “offensive weapons systems” to Russia via a military air base in Syria.
 
  “In June, two airplanes from Iran flew directly to the Khmeimim Air Base [southeast of Latakia] – the most important Russian military base in Syria – in order to bring the military equipment for transport to Russia,” the paper said.
 
According to Welt am Sonntag, the heavy military goods were loaded onto trucks and taken to the Syrian port of Tartus. The Russian ship Sparta III then delivered the weapons a few days later to Russia’s main Black Sea port of Novorossiysk.The paper said the weapons were sent to Russia for “service maintenance.” It is unclear what types of weapons the Iranian regime sent to Russia. The Iran-Russia transport route was termed “a new smuggling route.” … 

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NWS_a2
9.

Reuters: “Despite Delay, U.S. Expected to Impose Steel Tariffs”

(Source:
Reuters, 15 Aug 2017.) [Excerpts.]
 
U.S. President Donald Trump is still expected to impose steel import tariffs on national security grounds despite the delay of a probe into the matter and pursuit of multilateral talks to reduce excess capacity, industry players and trade experts say.
 
U.S. steel stocks .SPCOMSTEEL have fallen nearly 10 percent since Trump delayed the release of the so-called “Section 232” review of the U.S. steel industry last month, partly reflecting fears that his promises to protect the industry may not materialize.
 
But industry analysts say the falls might be overdone, and there is reason to think that import relief may still happen.
 
  “Based on (Commerce Secretary Wilbur) Ross’s recent statements and our discussions with trade lawyers engaged in section 232, we still expect measures that will have a positive impact on U.S. steel prices,” said Seth Rosenfeld, a steel industry analyst at Jefferies in London.
 
  “The most likely outcome is tariff rate quotas where the level of tariff changes dependent on the volume of imports. This structure serves as something of an upside cap on steel pricing so they do not get out of control,” Rosenfeld added.
 
Trump launched the probe into whether steel imports compromise U.S. national security in April, boosting U.S. steel stocks, but said in July a final decision might have to wait until other top-priority issues are addressed.
 
Ross said he would defer to Trump’s lead and also cited multi-lateral talks to reduce excess capacity, fuelling concern in the steel industry that the “232” review, initially scheduled to conclude in late June, might be scrapped or substantially watered down.
 
A Trump administration official told Reuters, however, that the steel probe remains active and “is still under the final stages of review within the administration”. …    

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COMMCOMMENTARY

COMM_a0110
.

J. Pin: “Encryption Control in France”

 
* Author: Jerome Pin, Trade Compliance Advisor, Tradewin. For contact information, click here.
 
Most exporters of technology products have learned in the past, either through good corporate governance or a knock on the door by their local export control enforcement authority, that encryption is a sensitive subject (pun intended).
 
Within the European Union, most items incorporating encryption are classified as dual-use goods (when not Military items) and are subject to Export Control.
 
Within the EU, French authorities extend control of encrypted items beyond the export process to import as well.  Cryptographic items can move freely within French territory. However, supplying, importing, or exporting encrypted items are regulated activities.
 
Encrypted items are defined in French law (Article 29 of French law 2004-575) as any hardware or software designed or modified to transform data, whether it is either information or signals, by secret conventions or to carry out the inverse operation with or without secret conventions. The main purpose of these cryptographic functions is to guarantee the security of the storage or the transmission of data while ensuring their confidentiality, authentication, and integrity.
 
Encrypted items are subject to either a declaration or an authorization process, prior to being supplied, imported or exported to and from France. The Agence Nationale de la Sécurité des Systèmes d’Information (ANSSI) records these declarations and reviews the authorization requests.
 
In order to import a cryptographic product into France, including from another EU member state, prior authorization is required from ANSSI. Depending on the type of product being imported, authorization can take one to four months before importation is allowed. Thus, suppliers and importers must work closely together to ensure that the appropriate documentation is obtained to successfully import the product.
 
To export cryptographic product from France to destinations outside the European Union, exporters must, of course, determine a valid ECN classification for the item, if classifiable under the EU dual-use list and apply for the appropriate export license or provide the appropriate notification to the authorities based on the destination and license options for the export.
 
Also, don’t forget the U.S. rules! If your product is U.S. origin or has transited through the U.S., you may need a U.S. export license to move the goods between two non-U.S. locations.

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COMM_a2
11. M. Volkov: “Wake Up and Mind Your Culture – Practical Approaches to Managing a Company’s Culture”

(Source: Volkov Law Group Blog. Reprinted by permission.)
 
* Author: Michael Volkov, Esq., Volkov Law Group, mvolkov@volkovlaw.com, 240-505-1992.
 
Ethical culture is the flavor of the year these days. We are seeing more postings and articles about the importance of ethical culture, and even pushing the idea of measuring and monitoring culture.
 
It was only seven years ago, 2010 to be exact, when the US Sentencing Commission added ethics to the applicable guideline defining compliance program requirements. We have definitely come very far in the last seven years.
 
An ethical culture takes work, and is not just a mish mosh of laudatory, feel good values and principles. I would argue that compliance officers have to be careful not to get lost in the feel good aspect of ethics, and remember the importance of applying practical measures to  promoting a company’s ethical values as an important guidepost for corporate conduct.
 
It is easy to get lost in the dizzying descriptions of “doing the right thing,” or “acting with trust and integrity.” A company’s culture is not a political message or a call to arms. To the contrary, a company’s culture is designed to promote several basic objectives: (1) to reduce employee misconduct; (2) to embed a speak up culture; (3) to improve employee performance and reduce employee turnover; (4) to enhance corporate sustainability and financial performance; and (5) to provide common principles for the company or organization to project to others in the community, government, business partners, vendors and suppliers.
 
My point is that compliance practitioners have to keep their eye on the ball and approach their company’s culture as an essential resource that needs to be carefully monitored and promoted. CCOs can design all the fancy controls and policies they can dream up, but without a culture of ethics and compliance, their efforts are likely to end up in an ash heap of broken and ignored policies.  This mission, however, is often confused with assembling and communicating a bunch of empty value phrases that have no practical application to employees’ work responsibilities and day-to-day conduct.  Therein lies the rub and the challenge.
 
A CCO has to devote time and attention to the company’s ethical culture. Such an efforts requires quarterly reports to senior management and the Audit/Compliance Committee on culture issues – measurements of geographic offices and divisions, focus group results, survey results, and other creative approaches to engaging the company’s culture.
 
For some reason, CCOs have satisfied their culture focus by relying on human resources to conduct an annual or bi-annual survey of all employees concerning culture questions. A company that conducts these cut and paste surveys is basically ignoring its culture.
 
CCOs have to take the lead in this area and push the board, senior management, human resources and managers and employees to engage on this critical issue. There are a number of creative strategies being employed in the compliance community and professionals need to share culture strategies with each other.
 
One simple requirement that a CCO can set for himself or herself is to report quarterly to the Audit/Compliance Committee on the company’s culture. In this way, the CCO will have to come up each quarter with a practical objective and result to report to the board. For example, the CCO may conduct a survey of a high-risk office, or even a part of an office. Each quarter could be used to focus and report on one culture objective.
 
CCOs have to start from the beginning – a code of conduct and statement of corporate values. Based on this foundation, a CCO has to adopt strategies and communications techniques to embed the company’s culture, relying on a mix of board and senior management conduct to highlight, middle manager training and talking points used to spread the culture message and principles, and monitoring and evaluation projects to pay consistent attention to the company’s culture.
 
CCOs have to approach a company’s culture just like any other control, recognizing that culture has a broad and significant impact on corporate conduct and financial performance. Many in a company may resist such attention to culture, but the CCO should continue to educate and enlist “believers” in the value of a company’s culture, and the substantial benefits from investing in culture promotion and management.

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COMM_a3
12. J.C. Poling, M.B. Fadlallah, & J. Helder: ” OFAC Pushes New Limits on Jurisdiction of U.S. Sanctions by Penalizing Non-U.S. Companies for ‘Causing’ Violations by Making U.S. Dollars Payments”

 
* Authors: Jonathan C. Poling, Esq., jpoling@akingump.com; Mahmoud Baki Fadlallah, Esq., mfadlallah@akingump.com; and Jasper Helder, Esq., jasper.helder@akingump.com. All of Aking Gump Strauss Hauer & Feld LPP, Washington DC, Dubai, and London, respectively.
 
Key Points
 
 – The U.S. government has used the charging theory of “causing” violations to assert broader jurisdictional reach over non-U.S. entities engaging in transactions that have no direct contact with the United States, other than making payments in U.S. dollars.
  – Payments in U.S. dollars in transactions involving sanctioned countries should be a heightened compliance and enforcement risk for all persons involved in the transaction, including non-U.S. persons.
  – This case represents the first time that OFAC has penalized a non-financial institution outside the United States for engaging in a transaction with a sanctioned country where the only nexus with U.S. jurisdiction is that the transaction is conducted in U.S. dollars.
 
On July 27, 2017, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced the civil settlement with CSE TransTel Pte. Ltd. (“TransTel”) and CSE Global Limited (“CSE Global”) in the amount of $12,027,066 for potential civil liability for apparent violations of the U.S. economic sanctions against Iran. Past enforcement actions based upon similar facts have targeted the non-U.S. financial institution involved in the transaction, rather than the non-U.S. company. This case represents the first time that OFAC has penalized a non-financial institution outside the United States where the sole nexus was settling a transaction with a sanctioned country in U.S. dollars, which OFAC has stated thereby resulted in the non-U.S. entity causing a violation of U.S. sanctions by a financial institution.
 
The enforcement action is noteworthy for several reasons and marks a continued effort by the U.S. government to assert jurisdiction over transactions among non-U.S. entities solely due to payment being conducted in U.S. dollars and the indirect involvement of U.S. financial institutions in such transactions:
 
  – U.S. dollar transfers in transactions involving sanctioned countries should be a heightened compliance and enforcement risk for all persons, including non-U.S. persons.
  – The U.S. government is continuing to use the charging theory of “causing” violations to assert greater jurisdictional reach over non-U.S. entities that otherwise have no direct contact with the United States.
 
First, the existence of U.S. dollar transfers in transactions involving at least one sanctioned country, Iran, should be a heightened compliance and enforcement risk for all persons, including non-U.S. persons. TransTel and CSE Global are both foreign companies, and the enforcement action alleges no basis for U.S. jurisdiction over the entities other than that the entities are alleged to have “caused six separate financial institutions to engage in the unauthorized exportation or reexportation of financial services from the United States to Iran” in violation of 31 C.F.R. 560.204. In short, there is no allegation of U.S. persons (U.S. citizens or permanent residents, or entities) involved in the transactions, no allegation of non-U.S. persons engaged in the transactions while in the United States and no allegation of U.S. origin goods. There is also no explanation of how the U.S. financial institutions were presumably involved in clearing these payments. Instead, the alleged violation asserted by OFAC (and agreed to as part of the settlement by TransTel and CSE Global) is that a non-U.S. company “caused” a non-U.S. financial institution to, in turn, cause a U.S. financial institution to provide financial services, the benefit of which was received in Iran.
 
The settlement indicates that TransTel and CSE were banking with a non-U.S. financial institution located in Singapore, and maintained with this Singapore bank individual U.S. dollar and Singaporean dollar accounts. TransTel received purchase orders from multiple Iranian companies to deliver and install telecommunications equipment for several energy projects in Iran and, as part of fulfilling the purchase orders, engaged third-party vendors to provide goods and services for the purchase orders. OFAC’s enforcement action highlights that TransTel and CSE Global represented to the Singapore bank that it would “undertake not to route any transactions related to Iran through [the Bank], whether in Singapore or elsewhere.” Despite this representation, TransTel is alleged to have originated U.S. dollar funds transfers from its U.S. dollar-denominated account with its Singapore bank that were related to its Iranian business beginning no later than June 2012 and failed to mention references indicating the payments for Iranian projects or parties. There is no allegation beyond the representation made by the companies to the Singapore bank that they were legally required to mention Iran projects or parties on the payments. Nonetheless, OFAC admonishes in the penalty announcement:
 
When signing letters of attestation or making other representations and warrantees to financial institutions that provide access to the U.S. financial system, individuals and entities should consider carefully whether they are willing and able to act within the parameters of such agreements.
 
Second, the U.S. government is continuing to use the charging theory of “causing” violations to assert greater jurisdictional reach over non-U.S. entities. 31 C.F.R. 560.204 provides that:
 
the exportation, reexportation, sale, or supply, directly or indirectly, from the United States, or by a United States person, wherever located, of any goods, technology, or services to Iran or the Government of Iran is prohibited, including the exportation, reexportation, sale, or supply of any goods, technology, or services to a person in a third country undertaken with knowledge or reason to know that [the goods or services are intended for Iran or the government of Iran].
 
Section 203 of these regulations prohibits any transaction that “causes a violation.” The statute authorizing this regulation to be issued-the International Emergency Economic Powers Act (IEEPA)-provides for civil and criminal liability if one were to “attempt to violate, conspire to violate or cause a violation” of the regulations. The civil and criminal maximum penalties can be severe. This case was treated by OFAC as an “egregious” case under its Enforcement Guidelines, in part, due to the fact that the companies had not initiated voluntary self disclosures. Other factors leading to this determination included that (i) TransTel “willfully and recklessly caused apparent violations of U.S. economic sanctions by engaging in, and systematically obfuscating, conduct it knew to be prohibited, including by materially misrepresenting to its bank that it would not route Iran-related business through the bank’s branch in Singapore or elsewhere, and by engaging in a pattern or practice that lasted for 10 months”; (ii) TransTel’s then-senior management had actual knowledge of-and played an active role in-the conduct underlying the apparent violations; (iii) TransTel’s actions conveyed significant economic benefit to Iran and/or persons on OFAC’s List of Specially Designated Nationals and Blocked Persons by processing dozens of transactions through the U.S. financial system that totaled $11,111,812 and benefited Iran’s oil, gas and power industries; and (iv) TransTel is a commercially sophisticated company that engages in business in multiple countries.
 
Non-U.S. clients that choose to engage in transactions involving sanctioned persons or countries and are doing so on the basis that the transactions are concluded with non-U.S. counterparties, with payment through non-U.S. financial institutions, for non-U.S. origin goods or services, should carefully assess the jurisdictional assumptions in light of the expansive theory expressed in this enforcement action and an apparent continued willingness by the U.S. government to assert these theories in enforcement actions against non-U.S. individuals and companies. Although the TransTel case highlights the alleged misrepresentation to its Singapore bank, it remains unclear what evidence TransTel is alleged to have seen that would place the company on notice that it was causing the exportation of a financial service from the United States (e.g., by a U.S. financial institution) other than the mere knowledge that the underlying transactions were denominated in U.S. dollars.
 
This fact missing from the allegations remains a concern, given that the U.S. Treasury Department in the prior administration stated on multiple occasions that the mere existence of U.S. dollars is not sufficient to assert jurisdiction. Recent enforcement actions suggest that it may be too fine of a line for non-U.S. clients to parse as to when U.S. jurisdiction does and does not exist if U.S. dollars are being used, but where the use of U.S. dollars may nevertheless involve or “cause” indirectly a U.S. financial institution to violate economic sanctions. The most prudent route would be for clients to presume, for sanctions compliance purposes, that U.S. jurisdiction either exists, or could be asserted by the U.S. government, any time a transaction is denominated in U.S. dollars.

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COMM_a4
13. Gary Stanley’s ECR Tip of the Day

(Source: Defense and Export-Import Update; available by subscription from
gstanley@glstrade.com
)
 
* Author: Gary Stanley, Esq., Global Legal Services, PC, (202) 352-3059,
gstanley@glstrade.com
.
 

ECCN 0A919 covers foreign-made “military commodities” that incorporate more than a de minimis amount of U.S. origin “600 series” controlled content. 

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TEEX/IM TRAINING EVENTS & CONFERENCES

COMM_a4
14. ECTI Presents Bringing Export Compliance into the New Century: A Roadmap for a Modern Export Compliance Program Webinar, 12 Sep

(Source: Danielle McClellan, danielle@learnexportcompliance.com)

* What: Bringing Export Compliance into the New Century: A Roadmap for a Modern Export Compliance Program
* When: Sept. 12, 2017; 1:00 p.m. (EDT)
* Where: Webinar
* Sponsor: Export Compliance Training Institute (ECTI)
* ECTI Speaker: Waqas Shahid & Rosanne Giambalvo
* Register: Here or Danielle McClellan, 540-433-3977, danielle@learnexportcompliance.com.

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ENEDITOR’S NOTES

* Napoleon Bonaparte (15 Aug 1769 – 5 May 1821.  As Napoleon I, he was Emperor of the French from 1804 until 1814, and again briefly in 1815. Napoleon dominated European and global affairs for more than a decade while leading France against a series of coalitions in the Napoleonic Wars. He won most of these wars and the vast majority of his battles, building a large empire that ruled over continental Europe before its final collapse in 1815. One of the greatest commanders in history, his wars and campaigns are studied at military schools worldwide. Napoleon’s political and cultural legacy has endured as one of the most celebrated and controversial leaders in human history.
  – “Never interrupt your enemy when he is making a mistake.”
  – “Glory is fleeting, but obscurity is forever.”

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EN_a316
. Are Your Copies of Regulations Up to Date?
(Source: Editor)

The official versions of the following regulations are published annually in the U.S. Code of Federal Regulations (C.F.R.), but are updated as amended in the Federal Register.  Changes to applicable regulations are listed below.
 
*
ATF ARMS IMPORT REGULATIONS
: 27 CFR Part 447-Importation of Arms, Ammunition, and Implements of War
  – Last Amendment: 15 Jan 2016: 81 FR 2657-2723: Machineguns, Destructive Devices and Certain Other Firearms; Background Checks for Responsible Persons of a Trust or Legal Entity With Respect To Making or Transferring a Firearm. 
 
*
CUSTOMS REGULATIONS
: 19 CFR, Ch. 1, Pts. 0-199
  – Last Amendment: 28 Jul 2017: 82 FR 35064-35065: Technical Corrections to U.S. Customs and Border Protection Regulations
 
* DOD NATIONAL INDUSTRIAL SECURITY PROGRAM OPERATING MANUAL (NISPOM): DoD 5220.22-M
  – Last Amendment: 18 May 2016: Change 2: Implement an insider threat program; reporting requirements for Cleared Defense Contractors; alignment with Federal standards for classified information systems; incorporated and cancelled Supp. 1 to the NISPOM  (Summary here.)


EXPORT ADMINISTRATION REGULATIONS (EAR)
: 15 CFR Subtit. B, Ch. VII, Pts. 730-774

  – Last Amendment: 15 Aug 2017: 
82 FR 38764-38819: Wassenaar Arrangement 2016 Plenary Agreements Implementation 

  
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FOREIGN ASSETS CONTROL REGULATIONS (OFAC FACR)
: 31 CFR, Parts 500-599, Embargoes, Sanctions, Executive Orders
  – Last Amendment: 16 Jun 2017: 82 FR 27613-27614: Removal of Burmese Sanctions Regulations 
 
*
FOREIGN TRADE REGULATIONS (FTR)
: 15 CFR Part 30
  – Last Amendment: 19 Apr 2017: 82 FR 18383-18393: Foreign Trade Regulations: Clarification on Filing Requirements 
  – HTS codes that are not valid for AES are available
here.
  – The latest edition (18 July 2017) of Bartlett’s Annotated FTR (“BAFTR”), by James E. Bartlett III, is available for downloading in Word format. The BAFTR contains all FTR amendments, FTR Letters and Notices, a large Index, and footnotes containing case annotations, practice tips, Census/AES guidance, and to many errors contained in the official text. Subscribers receive revised copies every time the FTR is amended. The BAFTR is available by annual subscription from the Full Circle Compliance website.  BITAR subscribers are entitled to a 25% discount on subscriptions to the BAFTR.
 
*
HARMONIZED TARIFF SCHEDULE OF THE UNITED STATES (HTS, HTSA or HTSUSA)
, 1 Jan 2017: 19 USC 1202 Annex. (“HTS” and “HTSA” are often seen as abbreviations for the Harmonized Tariff Schedule of the United States Annotated, shortened versions of “HTSUSA”.)
  – Last Amendment: 25 Jul 2017: Harmonized System Update 1706, containing 834 ABI records and 157 harmonized tariff records.
  – HTS codes for AES are available
here
.
  – HTS codes that are not valid for AES are available
here.
 
INTERNATIONAL TRAFFIC IN ARMS REGULATIONS (ITAR): 22 C.F.R. Ch. I, Subch. M, Pts. 120-130.
  – Last Amendment: 11 Jan 2017: 82 FR 3168-3170: 2017 Civil Monetary Penalties Inflationary Adjustment
  – The only available fully updated copy (latest edition: 10 Jun 2017) of the ITAR with all amendments is contained in Bartlett’s Annotated ITAR (“BITAR”), by James E. Bartlett III.  The BITAR contains all ITAR amendments to date, plus a large Index, over 800 footnotes containing amendment histories, case annotations, practice tips, DDTC guidance, and explanations of errors in the official ITAR text.  Subscribers receive updated copies of the BITAR in Word by email, usually revised within 24 hours after every ITAR amendment.  The BITAR is available by annual subscription from the Full Circle Compliance website.  BAFTR subscribers receive a 25% discount on subscriptions to the BITAR, please contact us to receive your discount code.

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EN_a0317. 
Weekly Highlights of the Daily Bugle Top Stories

(Source: Editor) 

Review last week’s top Ex/Im stories in “Weekly Highlights of the Daily Bugle Top Stories” published 
here

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EPEDITORIAL POLICY

* The Ex/Im Daily Update is a publication of FCC Advisory B.V., compiled by: Editor, James E. Bartlett III; Assistant Editors, Alexander P. Bosch and Vincent J.A. Goossen; and Events & Jobs Editor, John Bartlett. The Ex/Im Daily Update is emailed every business day to approximately 8,000 readers of changes to defense and high-tech trade laws and regulations. We check the following sources daily: Federal Register, Congressional Record, Commerce/AES, Commerce/BIS, DHS/CBP, DOJ/ATF, DoD/DSS, DoD/DTSA, State/DDTC, Treasury/OFAC, White House, and similar websites of Australia, Canada, U.K., and other countries and international organizations.  Due to space limitations, we do not post Arms Sales notifications, Denied Party listings, or Customs AD/CVD items.

* RIGHTS & RESTRICTIONS: This email contains no proprietary, classified, or export-controlled information. All items are obtained from public sources or are published with permission of private contributors, and may be freely circulated without further permission. Any further use of contributors’ material, however, must comply with applicable copyright laws.

* CAVEAT: The contents of this newsletter cannot be relied upon as legal or expert advice.  Consult your own legal counsel or compliance specialists before taking actions based upon news items or opinions from this or other unofficial sources.  If any U.S. federal tax issue is discussed in this communication, it was not intended or written by the author or sender for tax or legal advice, and cannot be used for the purpose of avoiding penalties under the Internal Revenue Code or promoting, marketing, or recommending to another party any transaction or tax-related matter.

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